More Buyers Becoming Wary of Short Sales

More Buyers Becoming Wary of Short Sales

Daily Real Estate News |
Thursday, August 15, 2013

Home buyers once saw short sales as big bargains, but their appeal has fizzled in some parts of the country — so much so that some real estate professionals are advertising listings as "not a short sale" to attract more buyers.

"'Short sale' does have a stigma now," says Summer Greene, regional manager of Better Homes and Gardens Florida First Real Estate in Fort Lauderdale, Fla. Greene says getting bank approval for a short sale can be difficult, and the process of buying a short sale can take four to six months in her area.

A recent study found that short sales in Boca Raton tended to stay on the market much longer than other homes. And when homes were advertised as "not a short sale," they tended to sell for 2 percent to 5 percent more than comparable non-distressed homes that were not advertised the same way, according to the study. Homes advertised as "not a short sale" also sold faster, according to the study.

"What really caught our eye was there were a lot of people specifically stating, 'We are not a short sale,'" says Ken H. Johnson, the study's co-author and a professor with Florida International University's real estate department. "Not only were [the homes] not a short sale, but they got the extra mile to state that to clearly delineate themselves from the rest. That shouldn’t be happening."

In housing markets where short sales are less prevalent, agents say they aren’t noticing the stigma. Buyers aren't as aware of the lengthy process so they don’t dread it as much. Therefore, singling out a property as “not a short sale” would be pointless, says Diane Saatchi, an associate broker with Saunders and Associates in the Hamptons.